Is it time to sell? It’s a big decision!
The decision to sell your business in Barrie is not one to be taken lightly.
Letting go of the enterprise that you’ve built involves careful planning, and serious consideration of the financial, legal, tax, lifestyle and emotional matters you’ll be facing.
Understanding how to sell a business in a way that meets your needs is a great place to start. Start discussions with a Business Broker in Barrie to get the right plan in place, get the best from the exit of your business and avoid costly mistakes.
Below you will find information on some of the key considerations to sell a business in Barrie.
If you have any questions that we have not covered, please don’t hesitate to contact us.
Planning and Preparation are Critical!
Because there are so many considerations that will affect the value or your business, your after tax proceeds, and the attractiveness of your business in the marketplace, proper planning and preparation can make a huge difference in the outcome of the sales process.
We encourage all business owners to control the circumstances that affect the value of their businesses and to constantly build for maximum return on investment. Every step you take to prepare your business for sale will ultimately create a more enjoyable and more productive business environment for you to work in. It will also ensure that you’re ready when the right opportunity comes along.
Before we get into some of the key steps, Be Aware that Timing is Critical. Prepare your exit strategy well in advance of selling. Sell before you are burned out; far too many entrepreneurs hang on too long after their energy and enthusiasm for the business have deteriorated and have started to diminish the performance and value of the business.
Let’s look at some of the keys on how to sell a business below. If you want to read more, download Insider Tips on Selling a Business in Canada.
- Define and thoroughly evaluate your reasons for selling
- Consider what alternatives there might be to selling
- Determine if selling is indeed your best option at this point in time
- Work with a financial planner and tax lawyer to structure optimal transaction strategies and your best approach to managing the proceeds of the sale (ask your intermediary for recommendations)
- Determine if the proceeds of the sale will provide the funds you require to sustain your lifestyle
- Evaluate your optimal terms and conditions for sale
- Determine the best possible timing for you
- Are you ready for your retirement?
- What will you do once you sell your business?
- How does your family feel about selling?
- Will selling satisfy your financial needs for retirement or other pursuits?
- Are you interested in continuing to work in the business?
- Do you plan to buy another business?
Talk with a Sunbelt Business Broker in Barrie to understand how buyers are likely to perceive the value of your business. While a formal business valuation is required to go to market, you can contact us, enjoy a conversation and lean our experience before making any commitments.
- Get a Business Valuation done by qualified experts with a credible track record. There are different types of business valuations, ours help you understand the what you can expect to sell a business for.
- Understand the value drivers that will affect the sale price of your business
- Consider your potential for increasing value if you make improvements
- Decide if the time, effort, costs and resources are realistic to increase the value of your enterprise within a reasonable time frame
- What kind of growth is your business experiencing?
- Is your business operating at optimal efficiency?
- Is your return on investment approaching its peak?
- Have you implemented systems and processes to make it possible for a new owner to successfully operate your business?
- Is the business dependent on you?
- Can your knowledge and skills be transferred to a new owner to increase saleable value?
Keep the sale of your business confidential to preserve the value of the business. Be cautious in your discussions with staff, suppliers, bankers, customers, competitors and personal contacts.
Working with a Sunbelt Canada Business Broker will allow you to carry on keeping your business healthy while we confidentially guide the sale of your business. Our system to confidentially find buyers and confidentially guide the deal to a successful conclusion are invaluable.
There are long lists of things to be done as you prepare to sell. We will help you identify and prepare with the sale and a positive transition in mind. Here are a few things to consider:
- Provide detailed and accurate Financial Information.
- Ensure your books and records are up to date with 3 years of financial history.
- Be clear about how your business operates, who the clients are, what is special about your business and what opportunities are available to improve the business.
- Provide accurate information on inventory, equipment, FF&E.
- Present your business in the best way, as tidy and organized as possible.
We will prepare an excellent package that clearly explains your business so the right buyer can make a well informed offer. Next let’s look at how to keep your business at peak performance and then how we find and get ready for the right buyer.
Keep your business in peak condition so it shows well when the right buyer is ready. Buyers are most attracted by a business with steady or growing performance, stay focused on strong business operations and let your business broker limit the distractions.
- Keep running your business as though you plan to have your best year ever.
- Stay focused on running your business, don’t get distracted by the sale of the business. Let your business broker bring you the right buyers and guide you when to be involved.
- Keep a healthy pace in all areas of your business.
- Don’t stop marketing or try to trim expenses.
When selling a business it is satisfying to know you have found someone who has the passion for the business, the abilities to run the business and the financial resources. Finding the right buyer means having the ability to confidentially market, to screen for buyers who are a great fit and to properly introduce them to the business and to you.
The last thing you want to be doing is wasting time with unqualified buyers. Sunbelt Business Brokers have a large pool of pre-screened buyers and a system to confidentially find and screen buyers before they are introduced to you. Stay focused on operating your business and let your broker manage finding the right buyer for your business.
Once you have met the buyer and they feel this is the right business for them, they will make an offer. The offer will:
- lay out the price and terms the purchaser is prepared to offer;
- set a date for closing, with conditions to be met before closing(and perhaps some for after closing);
- specify how and when the purchase price is to be paid and under what conditions;
- set out expectations for the seller’s responsibilities after closing, such as training of the purchaser or continuing employment.
The offer may establish a time frame for due diligence and it may request exclusivity in negotiation for a period of time.
Having a business broker manage the negotiations will create a win-win deal and you are able to tap their experience and share your wishes on the terms of the deal.
You now have an accepted offer, both parties now need to do reasonable investigation to make sure everything is as it was portrayed.
The Buyer will want to verify many items including: operational procedures, payroll, job descriptions and details about team members, training programs and procedures, safety policies and procedures, workflow and processes, systems and manuals and your policies and programs for both HR and operations. The buyer or their advisors will review financials, assess equipment, confirm titles etc…
As the seller you will want to validate that the buyer will do a good job running your business and that they’ll look after staff and clients. You want to be sure they will repay the financing you are providing, so you need to check out the buyer just as they are checking out your business.
Your business broker will work with you to prepare for due diligence. Be ready to substantiate the information provided to each other, this increases trust and helps avoid issues in the transaction.
Diligence is complete and you are ready to close the deal. You now need a transaction lawyer to draft the closing documents:
- non-compete, training, and transition agreements;
- a promissory note for the financing as well as a security agreement to protect that financing;
- an agreement of purchase and sale reflecting the deal and the structuring.
If it is a share sale, you may also require an agreement to hold the shares in escrow until fully paid for by the purchaser. If an asset sale, register security against the assets of the business.
As closing approaches, work closely with your business broker to guide you through items like an inventory count, how to handle work in progress billing, recent expenses. Your brokers experience is important here in quickly resolving any potential sources of conflict that could damage the deal. Do expect some post closing adjustments as you will not have all of your bills available at the time of closing.
You do not, however, want to alert staff to the sale until all conditions have been met. After closing you will probably want to hold a staff meeting to introduce the new owner and give them an opportunity to reassure the employees and to set the values and culture under which the business will operate.
Once the deal is closed it is time to work together with the buyer for a positive transition.
Do you have other questions?
Be sure to visit Seller FAQs to answers to the following questions.
- How long does it take to sell my business?
- What can business brokers do – and, what can’t they do?
- What can I do to help sell my business?
- What happens when there is a buyer for my business?
- Why is seller financing so important to the sale of my business?
For more insight you can also download our book, Tips on Selling a Business in Canada by visiting our corporate site.